Jason Stipp: Ken, I want to step back a little bit and talk about some of the broader issues that we're facing right now, and Vanguard's take, what your expectations might be from them because investors have these questions.

The big one I think coming up soon is the end of the Quantitative Easing 2, it's called the QE2. So this is the Fed buying certain securities to help the market out in those areas and also to have an effect on interest rates. That buying is going stop. Some folks are worried about what this may mean for the bond market. What's Vanguard's expectations, if any, for the impact that the end of QE2 may have?

Ken Volpert: The real goal of QE2 was to try to increase inflation expectations in the marketplace. It was really driven by a view by Bernanke and by the FOMC that inflation expectations, inflation was below their long-term target, and they wanted to get inflation higher.

Part of this was increasing asset prices in such a way that there would be a wealth effect, consumers would spend and prices would start increasing more in the economy at large, and we did see that. Actually we saw break-even inflation is measured by the TIPS market increased 50 basis points within a month, and then we've seen higher inflation going forward.

So, when QE2 ends ... the juice that's been helping the capital market is actually is going to away. So, what could happen is you could have a period of, in terms of the equity markets and in terms of just the risk markets--not the Treasury markets so much--but the risk markets not performing quite so well, because there hasn't been the money coming out of Treasuries and going into other asset classes.

Stipp: So, a follow-on question. So you said the Fed was aiming to actually bring some inflation. We actually have seen inflation especially because of a commodities spike here in first half of 2011. So, my question for you is how concerned is Vanguard about the inflation issue especially from the fixed-income standpoint, where it can really erode some of the purchasing power that you would get from your fixed-income investments?

Volpert: Right. We do expect that inflation is going to continue to move higher as the economy recovers, and ... we view the economy as now even past the recovery stage and now in the expansion stage. So, we see core inflation kind of working up from the low 1% range up to the 2% range over the course of the next year or two, and commodity price inflation, which is going to be variable, we think we'll also add a little bit incrementally to that. So, we see rising inflation, but we don't think it's that much of rise that's it's going to be that significant in terms of the impact on bond investors at this time.

Stipp: Okay, so some inflation but not rampant necessarily?

Volpert: Not rampant, certainly nothing like we saw in the early '80s when we saw inflation in the high single-digits and low double-digits. We don't see it going anywhere near that.

Stipp: All right. Ken Volpert from Vanguard, thanks so much for joining me today and for your insights on the fixed-income market.